Outlawry was an important part of our ancestory as it made folk travel, discover and settle in new parts of the world. What was it, I have never seen many threads on it, so here is my opinion from my reading on the subject.
Although outlawry was a punishment it was primarily to stop revenge, there was no making a better man per se. These laws were the first they are called Gulathings and Frostathing law. After a crime that was commited the individual was placed outside of the law, there were two levels of outlawry in eglish I will say Irredeemable and redeemable.
Folk were given a fine (weregild), until paid if they or there family could not pay they were officially outlawed at the thing of there country. If weregild was paid there was no revenge by the victim or there family. This was used for crimes that were not classed as irredeemable.
Irredeemable crimes called 'Ubota-mal' where no weregild could be paid, you were immediately outlawed and all property was lost, including Odal (loss of Inheritence, lineage and nobility), no one called an Ubata-man could redeem himself. This would be ratified and a ruling on time was given at the Althing.
A nithing slaying also an Ubota-mal, was also called 'settareid' this is where a crime was also against an Oath, you could be slain with impunity.
If you commited a crime of laying with a women that was not allowed Gulathings law 160, you could be slain instantly and as long as the person who slayed them told the first person he met there was no crime in the law. If that crime was commited and you were not slain you were called 'Ubota-Menn' in law, you were also named 'Varg i veum' (Wolf in the Sanctuary) and or 'Skogar-man' (forestman), again these folk could be killed by any who saw him.
The lower outlawry was called (Utlegdarmal) which was where you could redeem your own crimes with a weregild. Corporal punishment was sometimes substitued for the weregild.
Looking forward to any questions or observations, some sagas to read Grettirs, Droplaugarsona, and Heimskringla.
link to the Gulathings and Frostathing law,
Modi